Competitiveness of Manufacturing SMEs and ecommerce Strategies: An Exploratory Empirical Research in Mexico

Transcription

1 21 th Bled econference ecollaboration: Overcoming Boundaries through Multi-Channel Interaction June 15-18, 2008; Bled, Slovenia Competitiveness of Manufacturing SMEs and ecommerce Strategies: An Exploratory Empirical Research in Mexico Celestino Robles-Estrada, Citlali Navarrete-Cova and Juan Antonio Vargas-Barraza University of Guadalajara, Mexico Abstract Faced with the rapid development of electronic commerce in Mexico and in many parts of the world, it becomes increasingly necessary to rely on theoretical-empirical studies that include both qualitative and quantitative analysis, to help us understand the many faces of electronic trading activity. As SME s are playing a very important role in the world economy, this research is aimed to analyze the relationship between the TOE model by Tornatzky & Fleisher (1990), and the competitiveness of manufacturing SME s Electronic Commerce (EC) strategy. This research is divided into three parts: The first part reviews the Resource Based View (RBV); the TOE model for innovations adoption; and how concepts on competitiveness create a framework to support analysis on EC strategies competitiveness - and discusses the link between them. The second parte discusses the results of an exploratory empirical study aimed to identify key factors and variables involved in the success of the SME s EC strategies. A Probit model was used to evaluate the relationship between the TOE factors and the ability of the company to develop effective EC strategies, preceded by a confirmatory factor analysis to specify the most important variables embedded in these three factors. Keywords: competitiveness, electronic commerce, smes Introduction For some years it has been stated that use of information technologies, such as EC, can help to improve SME s competitiveness. The competitiveness of firms is a key element in achieving the optimal utilization of free trade agreements and improves their performance in their participation in international markets. In this research, the three key factors proposed by Tornatzky & Fleisher (1990), were analyzed in its ability to improve the performance of SME s EC strategies. The organizational factor determines the internal dynamics of the company and can be assumed that plays an important role in the design of the formal strategy for activities EC within the company. The environmental factor analyses external agents to the company and has always been a key factor on understanding the customer, their competitors and the market itself, that plays a key role in the success of the EC strategy. Finally, the technological factor is essential to ensure quality in the services offered by the company and achieve innovation and good performance of EC practices within the company, so we may conclude that it can also explain to a certain extent, how good the firm EC strategy is. Theses research develops a Probit model aimed to prove these assumptions. 128

2 Competitiveness of Manufacturing SMEs and ecommerce Strategies: Literature review Competitiveness The term competitiveness can be described as the ability of an organization - whether public or private, profitable or not - to maintain and achieve systematic comparative advantages, to sustain and improve a certain position in the socio-economic environment (Porter, 2001). Competition plays a very important role in every company, as these must be different from its competitors. The competitive advantage of a company would be in his ability, resources, knowledge, attributes, and so on (Barney, 1991). Competitiveness is not a product of causality nor arises unexpectedly: it is created and it is achieved through a long process of integration of new organizational routines and representative groups that shape the dynamics of organizational behavior from customers, competition and the market. Therefore, competitiveness is currently the characteristic or quality that enables an organization to survive in saturated markets; if a company is not competitive it is doomed to disappear (Porter, 2000). There are many theories on competitiveness but there are seven patterns or principles on which most authors often coincide (Porter, 2001; Munch 2005:1, Munch, 2005:1 and Monteverde, 1992): 1. Stay on top of trends. Keep the company on the pulse of change. 2. Become a supporter of change. To be physically and psychologically prepared for the reality of change. The perspective on the change will have a profound impact on the ways in which workers are experiencing. 3. Recruit, reward and promote the best and brightest workers. The best employees will carry the company into the future. It should develop a human resources system to identify, train, promote and reward the best staff that exists both within the company and within the labor market. 4. Think globally, act locally. Information technology is reducing the world, creating niche markets around the globe. Think about how products and services can satisfy the client somewhere else. 5. Innovate. Which is currently done, it should be done better, cheaper and faster. If you do not know is prepared to innovate, then we have to be prepared to lose market action. 6. Investment in technology, people, and training. The money spent on technology, people, and training is not a cost but rather an investment. 7. Fighting complacency of success. Success is a barrier to change. If the company is successful, that sometimes means that there is no motivation to improve. When one is the leader in its market, we must not feel satisfied for a good season or by the size of the gap between our company, and the company itself. Based on the Porter s model (1982), the strategic analysis historically has explored why within the same sector there are differences in the performance of organizations. Because of this, the study of the strategy moved into the paradigm of strategy based on the resources and capabilities that firms have or acquire in order to compete, ultimately, moving from outside to inside at the time of promoting the creation of competitive advantages (Porter, 1985). Looking at the near future, those companies that are able to create competitive advantage, through the development and improvement of their capabilities, will be better prepared to face the current and future challenges. Factors Determining SME s Competitiveness The use of information technology helps companies increase their competitiveness, reaching into major markets and allowing the opportunity to design and implement new services and applications (Botelho, 2005). EC gives them a great opportunity for SME s to intervene in the dynamics of the global market, and profit from this as long as they have in their products with the quality and competitiveness that 129

3 Celestino Robles-Estrada, Citlali Navarrete-Cova and Juan Antonio Vargas-Barraza the market requires. Large companies, such as small and medium, have managed, through their Web pages to communicate with their customers in real time and offer their goods and services. Of course, the Internet has made it possible for electronic commerce is understood globally and in a manner most convenient, quick and cheap traditional commerce (Fernandez, 2002). The United Nations in its Report on EC, argue that the impact of information technology on the performance and competitiveness of businesses and industries will be achieved through an increase in the flow of information, leading to transfer knowledge as well as an improvement of the organization at such companies (United Nations, 2003:2). From the literature review it can be noticed the relative importance of internal factors versus external, evidence exists that domestic variables have the greatest influence on the competitiveness of organizations. This fact shifts the focus to the analysis of the resources and capabilities related to the success of smaller firms (Aragon & Rubio, 2005). The benefits that can perceive company from their EC strategies can be classified as direct and indirect benefits. For example, Mehrtens, Cragg and Mill (2001) argue that this technology provides a relative advantage on the traditional methods and businesses tools way improve communications. Beatty, Shim and Jones (2001) pinpoints the improved quality of service that a firm can provide to customers and the ease of communication with suppliers. Lui and Arnett (1999) explain the factors of success on Web sites. They identify four essential factors associated with success on the Internet within a context of EC. 1. The importance of the information observed in the company (either of their customers as their competitors) and the quality of products and services it offers. 2. The use of the system and the technological infrastructure. 3. The design of the site and the electronic service, with regard to technical support. 4. Systems engineering and quality standards. Golden, Hughes and Ruane (2002) consider three main aspects to analyze the success of SME s to use the Internet: 1. Organizational aspects. 2. Implementing Internet within the enterprise. 3. Maintaining the equipment for the electronic service. The aim is to identify factors that contribute to improving the performance of e-commerce by SME s. Since some companies use EC to rebuild their business strategies and transform a traditional business and give it a new application that facilitates the transfer of information between those involved in the organization. (Kalakota and Robinson, Vatcharaporn and Chavananon, 2001). Vatcharaporn and Chavananon, (2001) determined that success factors depend on the type of business or trade made on the Internet. For SME s seeking competitiveness in their participation in EC is necessary to identify the key variables of good performance in their EC practices. Zhu and Kramer (2005) developed a theoretical model based on the TOE model, which identifies three areas within the company that affect the process of adoption, implementation and use of technological innovations. The first is the technological context, which describes the existence of the use of technology and new technologies that are relevant to the company. The second is the organizational context that relates to the measurement of the size, scope and resources that are available in the company. And the third is the environmental context or environment, which is the arena in which the company operates, considering the industry, competition and government. Increases in productivity resulting should encourage SME s and bring a higher standard of living, and that the benefits should be particularly high for smaller companies and for the economies of underdeveloped countries, which traditionally have been harmed as a result of the limited information, the high cost of market access and distance from markets (Kumayama, 2001). 130

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